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Home > Articles > Non-Taxable Injury Settlements

Non-Taxable Injury Settlements

When a person receives income, taxes can significantly determine how much of that money that person actually gets to keep. In the case of civil claims, there are many types of case-related income that are not legally taxable income. As a result, a person receiving a settlement because of an injury may not be required to pay taxes on that sum.

If you or someone you love has been injured in a car accident, there may be legal options available. You might be able to obtain financial compensation for medical bills and other crash-related damages. To learn more about your legal rights, contact the Racine car accident attorneys of Habush Habush & Rottier S.C. ®, by calling 800-242-2874 today.

Non-Taxable Income

There are many kinds of civil cases that require settlement recipients to pay taxes on their money. These funds are largely defined by non-injury damages, including employment claims and reputation damages. In addition, taxes may need to be paid for damages provided as punitive fees, not compensation. If attached as a punitive sum, with the exception of wrongful death suits in some cases, the settlement money generally will be taxed.

On the other hand, the following kinds of civil compensation receive a tax-free status:

  • Compensation for injuries
  • Compensation for emotional and psychological damages
  • Compensation for lost wages
  • Compensation for medical bills

The details of these payments rarely change this non-taxable status. The tax code does not treat sum gained from an out-of-court settlement any differently from a court award. Similarly, the funds are not to be taxed regardless of whether they are received as a lump sum or pursuant to a payment structure.

Contact Us

For more information regarding your legal options if you have been injured in a car accident caused by a negligent driver, carmaker, or municipal authority, contact the Racine auto accident lawyers of Habush Habush & Rottier S.C. ®, at 800-242-2874 today.

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